Unmasking the Secrets of Credit Scores
By Candace Bahr

So you want to buy a car or a house? How about get a credit card or a cell phone?

Not until they check your credit score. Do you know what factors go into your score? For most, it’s a complete mystery. Only recently has the long secret of how we are graded and given credit scores been unveiled. Here’s the breakdown:

1. Payment history -35%. If you’re late on bills your score will be negatively affected. The more recent the problem, the lower your score. In fact, a 30 or 45-day late payment right now is worse than a bankruptcy 6 years ago.

2. Outstanding debt - 30%. This judges how close you are to your credit limit. A little amount owed on a couple different cards, is better than "almost at your limit" on one.

3. Credit history -15%. No credit is almost the same as bad credit. So for all of you parents out there you might consider establishing credit accounts for your children early on, so they have a leg up when they go out on their own.

4. New credit and Types of credit – 20%. One of the easiest ways to harm your credit is by applying for too much new credit.

The first step to increasing your score is to get a copy of your report and fix any mistakes. Oh, and pay your bills on time.